This paper examines the changes that have occurred in the distribution and expenditures of funds in Rhode Island as a result of the change from categorical to block grant funding. Data were collected from the state education agency and each local education agency (LEA). Data on fiscal years 1982, 1983, and 1984 expenditures in and administration of the categorical programs consolidated in the Education Consolidation and Improvement Act of 1981, Chapter 2, were collected by means of interviews, questionnaires mailed to LEA Chapter 2 administrators (36 questionnaires were completed and returned), and examination of project applications. Results show: (1) Rhode Island school systems have experienced little change since the shift from categorical to block grant funding; (2) desegregation activities funded under the Emergency School Aid Act lost most funding because of this shift; and (3) LEA administrators in charge of Chapter 2 block grant programs felt that the programs involved more ease of administration, less paperwork, and greater programming flexibility than did the categorical programs. Five tables provide data on statewide funding levels, categorical funding levels, funding shifts, questionnaire results, and changes resulting from the shift to block grant funding. (PB)